Welcome Paul Kiel (ProPublica.org) and Host Cynthia Kouril (FDL posts)

[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. - bev]

The Great American Foreclosure Story: The Struggle for Justice and a Place to Call Home

As you know, we at FDL have had more than a passing interest in the foreclosure crisis in America. And if you have been reading along with us for the past 3+ years, you are pretty well informed of what happened, how it happened, how the government has utterly flubbed fixing it so far, and how it is continuing into the foreseeable future.

For those of you who have not kept up with the voluminous reading on the topic here at FDL, or for those who would like a concise, easy to read summary, with real life examples to illustrate the goings on, let me introduce you to a new e-book written by Paul Kiel from ProPublica called The Great American Foreclosure Story – The Struggle for Justice and a Place to Call Home.

At an easy-to-consume-in-one-sitting 74 pages (can you say “beach reading”?), The Great American Foreclosure Story is a 360 degree look at the foreclosure crisis: from predatory lending and the perverse incentives for mortgage brokers and loan originators – to the fee structure that encourages servicers to force paying homeowners into foreclosure – to the violation of fiduciary obligations to investors in the mortgage backed securities which prevent the meaningful mortgage modifications that would result in a “win/win” for both homeowners and RMBS (Residential Mortgage-Backed Securities) investors.

Ah, so much fraud and conflict of interest packed into such a small package!

So, if you are looking for a good read to understand all of the moving parts of the foreclosure crisis, from origination to the pension plan that is now underfunded because it invested in RMBS, this is the book for you.

100 Responses to “FDL Book Salon Welcomes Paul Kiel, The Great American Foreclosure Story: The Struggle for Justice and a Place to Call Home”

BevW May 26th, 2012 at 1:50 pm

Paul, Welcome to the Lake.

Cynthia, Thank you for Hosting today’s Book Salon.

Paul Kiel May 26th, 2012 at 1:57 pm

Thanks for having me! I look forward to a good discussion.

BevW May 26th, 2012 at 2:00 pm
In response to Paul Kiel @ 2

Paul, welcome, we are looking forward to the discussion about your book and foreclosures.

dakine01 May 26th, 2012 at 2:01 pm

Good afternoon Paul and welcome to FDL this afternoon.

Hi Cynthia!

Paul, I have not read your book and forgive me if you address this in your book but what effect does all the Foreclosure Fraud have on people who are trying to sell a house or condo, who have had their mortgage kept up-to-date, but are still dealing with the banksters? How can anyone trust any paperwork of any type coming from the banks and dealing with things such as titles?

dakine01 May 26th, 2012 at 2:03 pm
In response to dakine01 @ 4

(This question is based on the fact that I will be soon listing my late sister’s condo for sale and Wells Fargo currently holds the mortgage – which has me more than a little bit frightened)

Cynthia Kouril May 26th, 2012 at 2:03 pm

Hi Paul, Hi everybody.

Paul thank you so much for joing us to day

BevW May 26th, 2012 at 2:05 pm

As a technical note,
there is a “Reply” button in the lower right hand of each comment. Pressing the “Reply” will pre-fill the commenter name and number you are replying to and helps for everyone in following the conversation.

(Note: If you’ve had to refresh your browser, Reply may not work correctly unless you wait for the page to complete loading)

Cynthia Kouril May 26th, 2012 at 2:06 pm

Paul, to start us off, can you explain why you say that mortgage modification, even with principle and interst reductions is a win-win. We understand why it is a win for the homeowner.

Tell the folks out there why it is also a win for those who invested in RMBS.

Paul Kiel May 26th, 2012 at 2:07 pm
In response to dakine01 @ 5

Yeah, well that’s something a lot of people worry about. The short answer for your particular situation is that the person who really has to worry about title is the buyer. In a situation where it’s not a foreclosure and there’s no specific reason to question the chain of title, it probably won’t arise as a problem.

But more broadly, of course just about any loan, especially one that was securitized, will automatically have questions surrounding it, because the flaws in the system have been exposed for everyone to see.

Paul Kiel May 26th, 2012 at 2:13 pm
In response to Cynthia Kouril @ 9

Sure. The whole idea behind a mortgage modification is that it is done (speaking generally) when pursuing foreclosure is more likely to result in a loss to the investor than restructuring the loan. So as I say in the book, the whole idea is that it’s a “win-win”: a win for the investors who actually stand to lose from selling a home below the value of the loan and the homeowner. Of course, the big problem with the mortgage servicing system is that a lot of the time, that actual calculation was never made. People have been turned away for bogus reasons like lost documents, etc.

Cynthia Kouril May 26th, 2012 at 2:14 pm
In response to Paul Kiel @ 10

IDK if I agree with you about a house sale not implicating a title problem. We know of cases where two different banks have tried to foreclose onthe same property.

Unless the bank that originated the mortgage kept it on their books, you have no clue if the bank you make the payoff to at the closig when you sell is the right bank.

Think of the chaos if you pay off the wrong bank and a year later a different bank shows up with the original note?

I think the failure to properly transfer the notes at the time of securitization is going to have a negative impact on the real estate market for lots of years to come, even on houses that were never in default.

Cynthia Kouril May 26th, 2012 at 2:15 pm

Can you talk a bit about the egregious confilct of interest in having the servicer decide who gets the mortgage modification?

Paul Kiel May 26th, 2012 at 2:19 pm
In response to Cynthia Kouril @ 12

Yeah, I wasn’t saying there’s no possibility of a problem. You should be sure to get and keep all the relevant documentation – especially proof from the servicer that the loan was paid off. You never know. But I was just saying that a conventional sale is not the situation that’s most likely to result in a problem.

Kelly Canfield May 26th, 2012 at 2:21 pm
In response to Cynthia Kouril @ 13

Right. (Hi Cindy!)

The servicer has way too much power when the whole deal is really between the borrower and the owner of the note. That’s a problem.

Cynthia Kouril May 26th, 2012 at 2:22 pm
In response to Paul Kiel @ 14

That and people should look up the statue of limitations for quit claim deeds in their state

Dearie May 26th, 2012 at 2:28 pm

In December of 2010 Bank of America responded to my request for proof of who owned my note by informing me that they were looking into it and would let me know within twenty (20) days. I’ve never heard from them again — except the monthy mortgage bill, of course. How can one ever find out who actually has the original note?

Paul Kiel May 26th, 2012 at 2:29 pm
In response to Cynthia Kouril @ 13

Sure. If people want to read the section of the story that really gets into this, it’s here: http://www.propublica.org/article/the-great-american-foreclosure-story-the-struggle-for-justice-and-a-place-t/page5

There are two main things people need to know about the servicing industry. The first is that the servicer almost never actually holds the loan on its books. Among the biggest banks (which are also the largest servicers), they hold roughly 10% of the loans they service.

The second thing is that they’re paid mostly via a small fee for each loan they handle. So the whole industry is based on maintaining a high volume of loans while keeping costs low.

So in that situation, where the servicer doesn’t typically own the loan its handling, and has a strong incentive to keep costs low, you’re not going to get an industry with a strong focus on doing all that’s needed to avoid unnecessary foreclosures.

When you add in the fact that late fees and various foreclosure costs are a real profit center for servicers, you have a situation that’s really stacked against struggling homeowners.

HotFlash May 26th, 2012 at 2:29 pm

I am not currently in the RE market and have (thank the Great Bear) only a small, privately-held mortgage, but I have been wondering is we will ever hear the last of this. The thing that bothers me most of all is the utter corruption of the chain of ownership documentation by mortgage bundling and reselling, fraudulent foreclosure and worst of all, MERS.

How can people prove title anymore? Do title searchers even exist, and what can they actually prove? In the Olden Days you’d never even think to buy real estate without proving a clear title. Can that even be done anymore?

Will our children and grandchildren wake up to the knock on the door from transactions that supposedly date back before they were born?

BevW May 26th, 2012 at 2:31 pm
In response to Cynthia Kouril @ 16

Cindy, How would you verify if the originating bank – or the current bank – has the title? It is a physical file we should look for?

Cynthia Kouril May 26th, 2012 at 2:31 pm
In response to Dearie @ 17

In my experience, you can only know with certitude if the originator never sold your mortgage

Paul Kiel May 26th, 2012 at 2:31 pm
In response to Kelly Canfield @ 15

Yup. The servicer has all the power. Private mortgage-backed securities were structured in a way that gives the investor very little power.

Dearie May 26th, 2012 at 2:32 pm

So if my note went to Fannie Mae, I’ll never be able to verify the note?

Kelly Canfield May 26th, 2012 at 2:32 pm
In response to Paul Kiel @ 18

I’m not up to date on servicer fees for servicing as I left the industry in ’99, right when the Modernization Act was passed, repealing Glass-Steagall.

But at that time it was 1/4 of 1% of the unpaid principal balance, on an annual basis. Do you know what the servicer fee calculation typically is today? Lower, higher?

BevW May 26th, 2012 at 2:34 pm

Speaking of Titles – Paul, could you tell us about Shelia Ramos – and her foreclosure.

Cynthia Kouril May 26th, 2012 at 2:34 pm
In response to Paul Kiel @ 18

You know who is missing from the scenario? The trustee. The trustee hold the legal title to the mortgage AND has a fiduciary obligation to act in the best interest of the beneficiaries of the trust (which would be the pension funds, municipalities, etc who invested inthe RMBS).

Yet, for reasons never made clear to me, the trustees seem to abdicate this obligation to the servicers. That’s an angle I have not een pursued by lawsuit or government investigation.

Paul, what does you reporting show with regard to the trustees of the RMBS?

Kelly Canfield May 26th, 2012 at 2:35 pm
In response to Kelly Canfield @ 24

And that was just for servicing, for the investor. I’m not talking about fees the servicer charged the morgtgagees.

Those of course are a different story and really have risen. I’m just curious about what the fees to the note holders are these days.

Cynthia Kouril May 26th, 2012 at 2:35 pm
In response to HotFlash @ 19

Yep, that’s my take on it

Paul Kiel May 26th, 2012 at 2:36 pm
In response to Dearie @ 17

Well, frequently people only find out who the “investor” is when the servicer files a foreclosure suit. And even then some servicers have obfuscatory ways of suing. For instance, they might just list the trustee and not the actual loan pool.

Dodd-Frank had an actual provision that requires the servicer to respond to requests about who the owner of the homeowner’s loan is. The means to do this is a Qualified Written Request (a QWR). I’ve heard from many homeowners that servicers often don’t provide the investor when asked. If that happens, you might try filing a complaint with the FTC and/or CFPB. Make enough noise and you might get an answer. But of course the only way you can be sure to get an answer is litigation!

Cynthia Kouril May 26th, 2012 at 2:37 pm
In response to BevW @ 20

Well, before MERS, this was never an issue. There was an accurate physical file with actuall paper documents in coutry clerk’s or land offices. This was called the “Torrens System” and worked very well since the middle ages.

In only a couple decades electronic mortgage transfer has managed to bollux eveything up.

Paul Kiel May 26th, 2012 at 2:38 pm
In response to Dearie @ 17

Also, here’s a thing we published to help homeowners investigate the investor behind their loan: http://www.propublica.org/article/resources-for-investigating-investor-restrictions

Kelly Canfield May 26th, 2012 at 2:39 pm

Also scanning the e-book (sorry I hadn’t read this prior to this Salon! Bad me…)

About Ramos’s crap appraisal of her property. Do you know of any successful lawsuits against appraisers for USPAP violations? Seems to me the usual E&O insurance for appraisers would not apply in a case like hers, and leave that appraiser open to suit.

Dearie May 26th, 2012 at 2:39 pm

It may feel like bollux to us……but, hey, they’re winning, so it’s all good for the bad guys.

Cynthia Kouril May 26th, 2012 at 2:40 pm
In response to Paul Kiel @ 29

I ahven’t seen a foreclosure yet that listed the investors.

What I would like to see is a joint suit between investors and homeowners to force the trustee to actually perform the fiduciary duty and modify those mortgages and produce that win-win, but servicers and trustees in the cases I have followed go out of their way to keep homeowners from finding out who the investors/beneficiaries are.

Cynthia Kouril May 26th, 2012 at 2:41 pm

BTW, just be/c I haven’t seen one that listed the investors, doesn’t mean it does ot exist. If anyone knows of a case where the investors are listed

PLEASE LET ME KNOW

Paul Kiel May 26th, 2012 at 2:41 pm
In response to HotFlash @ 19

I wish I could lay out the steps for people to ensure they have clear title, but I can’t! You’re right — there are serious problems with the system. All people can do is keep all documents related to your mortgage transactions and get title insurance when you buy.

Paul Kiel May 26th, 2012 at 2:45 pm
In response to Kelly Canfield @ 24

The prevailing servicing fee for prime loans is still .25% of UPB. But for subprime it was often .5% UPB. There have been some halting efforts by the industry (particularly Fannie and Freddie) to change the structure of how servicers are paid, but nothing has stuck yet.

Paul Kiel May 26th, 2012 at 2:47 pm
In response to Cynthia Kouril @ 34

What I mean is that the foreclosure filing would list the trustee and then the loan pool. You’re right, it wouldn’t actually show the investors who hold the MBS. There is no public list of investors.

So in Sheila Ramos’ case, she got a lis pendens that said she was being sued by “Deutsche Bank National Trust Company as Trustee for the MLMI Trust Series 2007-MLN1.”

Cynthia Kouril May 26th, 2012 at 2:48 pm

In the book you give some examples of homeowners who were paying their mortgage on time and yet were still thrown into default and how some people were sort of tricked into defaulting

-can you recount those examples for us

-explain to our readers why a servicer would engage in such predatory behavior towards folks who can still pay their mortgages?

Cynthia Kouril May 26th, 2012 at 2:49 pm
In response to Paul Kiel @ 38

Yeah, I can get to the trust, I can read the 8Ks for the trust, but I cannot break through to pension fund or school district that owns the security. Drives me batty

Paul Kiel May 26th, 2012 at 2:50 pm
In response to Cynthia Kouril @ 30

A kind of subtle point, re: MERS. The clouded title problem extends to just about any securitized loan, even if it didn’t go through MERS. For whatever reason, a lot of loans weren’t done through MERS.

Cynthia Kouril May 26th, 2012 at 2:51 pm
In response to Paul Kiel @ 41

Agreed, but if each sale was documented in the county clerk’s office, there is a place to actually do a title search.

Paul Kiel May 26th, 2012 at 2:54 pm
In response to Kelly Canfield @ 32

Hi Kelly, I’m not sure of successful suits against rotten appraisers — not necessarily because none exist, but because I’d think such a suit isn’t likely to be high profile. I think people generally underestimate the role of appraisers in the housing boom similar to the way that the role of mortgage brokers is under-appreciated. You couldn’t have gotten rotten so many loans out the door without appraisers willing to generate bogus estimates.

bludog May 26th, 2012 at 2:55 pm
In response to Paul Kiel @ 36

I have written several qualified written requests to my servicer requesting they identify the owner of the note on my mortgage. Even though the servicer responds they refuse to identify the owner of the note. At one point they said they owned the note, then said an unknown entity owned the note and on another occasion stated that Fannie Mae owned the note. On each occasion they refused to provide me with any endorsements or allonges attached to the note identifying the note owner. I have come to the conclusion that my only alternative is to sue them to quiet the title because they do not have any evidentiary proof of ownership of the note. It seems to me that this chain of title problem is a systemic problem in the country and as Cynthia has stated above it is a problem that will last a generation.

Cynthia Kouril May 26th, 2012 at 2:57 pm
In response to Paul Kiel @ 43

Appraisers and rating agencies.

The bad news is there is already case law that lets the rating agencies off the hook saying that they were only offering “opinions”, which I find hilarious (in a bad way) because insurance coampnies, banks and pension funds are limited to investing in only “investment grade” securites. Who designates something “investment grade” ? Rating agencies making their opinions known.

So, I suspect that appraisers will get a smilar pass

Cynthia Kouril May 26th, 2012 at 2:59 pm
In response to bludog @ 44

Yep, The most they will tell you is the Identity of the trustee, who nominally owns the mortgage.

I have had folks write requesting hte ID of the “beneficial owner”, the “beneficiaries of the trust” and “the investors in the trust issued secuirtes”

No luck

Dearie May 26th, 2012 at 3:01 pm

Paul, are there any new ‘dance steps’ going on with the Obama crew, DOJ, Congress to avoid serious work on resolving this mess? New steps that we serfs haven’t heard of yet? That we’ll probably only recognize once they all step on our toes again. Is there anyone of substance working on this problem that we might pay attention to?

RFShunt May 26th, 2012 at 3:02 pm

Mr Kiel

I’m seeing the Kafkaesque situation you describe play out right as we’re talking here.

There’s a family in Minneapolis, the Cruze family, that paid their mortgage on time every month automatically through their bank. A computer glitch caused one of the payments to show up as missing. By the time they learned about it, the fines has become too large for them to pay. Their mortgage is in some never-never-land between Fanny-Mae (I believe) and PNC.

Occupy Minneapolis barricaded themselves to the doors, sent word down to Pittsburgh. Occupy Pittsburgh went to the PNC corporate offices and talked to a VP on Thursday. When he heard the specifics of the case, he swore he would made calls that day to straighten it out. Friday at 4am the sheriffs showed up with battering rams and broke down the front door. Occupy Minneapolis is back, but there seems to be no way to get a reasonable response from the system as it is.

I don’t mean to hijack this Book Salon with this specific case. If you or anybody is interested, here are videos documenting the whole thing.

OM barricading the doors::
http://www.youtube.com/watch?v=2UOnz6iiZL0

OP getting a promise from the PNC official.
https://vimeo.com/42815352

The aftermath of the Sheriff’s raid:
http://www.youtube.com/watch?v=bWLxLSngyXg

Again, don’t mean to hijack – just thought you’d be interested.

Paul Kiel May 26th, 2012 at 3:02 pm
In response to Cynthia Kouril @ 39

Ah yes, the fees. One of the best things about telling the story the way we did is that it allowed us to actually lay out the tricks and traps. Sheila’s loan came with a late fee of 10% of the overdue payment that was triggered if she was more than 10 days late. In other words, even if she made her full $2200 payment on the 11th day of the month, she’d be hit with a $220 fee.

This creates a kind of snowball situation for people who fall behind. Not only do they owe their normal payment, but they also have fees accruing. And servicers would often process late fees ahead of past due payments, meaning that your money would go to paying the fee and not your past due P&I. So that would beget more late fees.

It’s been horribly common for people to actually be thrown into default by no fault of their own. Probably the most common scenario is that the servicer makes some error with the escrow payments: for instance, the homeowner is dutifully paying their property taxes, but the servicer will just suddenly decide that the homeowner should be paying into an escrow account for the servicer to pay the taxes, but not communicate that decision to the homeowner. So all of a sudden the homeowner’s normal payment is short, triggering late fees, etc. And the homeowner may not find out that they’re considered in default for several months. Then it’s the whole slippery slope.

Cynthia Kouril May 26th, 2012 at 3:05 pm
In response to RFShunt @ 48

Not a thread jack at all. Actually Paul has a very similar case in his book and it’s that kind predatory behavior that suggest to me that they WANT folks to be in forelcosure and that all these protestations of bank ineptatude are perhaps a smokescreen for some profit (bonus) maximizing plan.

Paul Kiel May 26th, 2012 at 3:07 pm
In response to bludog @ 44

I believe they are at least required to provide the name of your trust (not just the trustee). You might try complaining to the FTC or CFPB to see if that gets you any where. I don’t know that they’re required to show you the note endorsement, though, outside of some sort of legal process.

One thing you can try doing is getting the complete loan file from the title company that handled your loan. If there was an endorsement in blank completed around the time of the loan, it might well be on the copy of the note in the file.

Cynthia Kouril May 26th, 2012 at 3:07 pm
In response to Paul Kiel @ 49

Don’t leave out forced placed insurance even though the homeowner already has insurance. And the allegations that insurance co’s are giving kickbacks to servicers

Cynthia Kouril May 26th, 2012 at 3:09 pm

I tell you, I would not want to be in the title insurance business these days. Think of all those policies already written waiting to blow up?

Paul Kiel May 26th, 2012 at 3:12 pm
In response to Dearie @ 47

In Congress, there have been some lawmakers who’ve been on this problem for quite a long time. I quote some in the book.

As for developments on the horizon, don’t expect anything out of Congress. The Republicans aren’t interested.

Very likely regulators (including the CFPB) will finally get their act together in the next year or so and issue new regulations for servicers. These would lay out standards for how they should handle homeowners facing foreclosure. That would be an improvement, though of course regulations mean nothing unless they’re enforced. And these regs wouldn’t give homeowners the power to themselves prevent servicer wrongdoing (short of suing), just give homeowners a reg to point to when they complain about the abuse.

Paul Kiel May 26th, 2012 at 3:14 pm
In response to Cynthia Kouril @ 52

Yes, absolutely. Insurance is the other big one and by far the more egregious, since servicers stood to profit from forcing ridiculously expensive policies on homeowners. It’s a mixture of incompetence and greed. I talked to a homeowner recently who went into default because the servicer was paying the taxes for a neighboring, larger property and just rolling that into her escrow obligations.

Cynthia Kouril May 26th, 2012 at 3:15 pm

I went to a CFPB event a couple weeks ago and they were very focused on the rulemaking and getting that up and going.

bludog May 26th, 2012 at 3:15 pm
In response to Paul Kiel @ 51

Thanks for responding. My loan is 12 years old. I have all the original documents. My servicer cannot even tell me who owns the trust deed, let alone the note. They have not refused to identify the note holder based upon the assertion they are not required to do so. They keep identifying different parties. The last letter I received from them they stated only that Fannie Mae is an “investor”. The original trust deed holder went out of business years ago. I did a county recorder title search and the only thing on record is the original trust deed that was recorded 12 years ago. I do not think my residence can be sold because the title is so muddled. I am fearful I would have to disclose this.

Cynthia Kouril May 26th, 2012 at 3:17 pm
In response to Paul Kiel @ 55

You see? That’s the kind of thing that drives me nuts. It doesn’t matter if the howmeowner does EVERYTHING RIGHT. The lawlessness of the mortgage industry can destroy anyone’s proeprty rights.

Paul Kiel May 26th, 2012 at 3:18 pm
In response to RFShunt @ 48

Speaking of a mixture of incompetence and greed, it has been sometimes amazing to me that the servicers are such a mess that they themselves have trouble untangling their own doings. It’s entirely plausible that the PNC exec meant to stop the foreclosure, but couldn’t stop the machine. Of course, it’s also plausible that he/she didn’t mean to. You just never know.

RFShunt May 26th, 2012 at 3:18 pm
In response to Cynthia Kouril @ 50

How do they sleep at night?

RFShunt May 26th, 2012 at 3:21 pm
In response to Paul Kiel @ 59

If he didn’t mean to and was lying, then he’s a got a career on broadway. A couple of the most skeptical and long-standing activists I know talked to him and came away convinced of his sincerity – but you’re right, you never know.

CTuttle May 26th, 2012 at 3:21 pm
In response to Cynthia Kouril @ 46

Aloha, Cynthia and Paul…! What about the ‘professional’ Title investigators, can they ascertain whom owns the note…?

Cynthia Kouril May 26th, 2012 at 3:22 pm
In response to bludog @ 57

How long ago did the recorded owner of the deed go out of business? You may be able to make an application for a “quit claim” deed. That would eliminate the trust deed and turn the promissory into into unsecured debt, and give you clear ttle to your house.

You have to consult a lawyer in your jurisdiction. You may be able to get free preliminary review of your case by contacting your local bar association. Many have started various forms of pro bono programs

Cynthia Kouril May 26th, 2012 at 3:24 pm
In response to CTuttle @ 62

I can’t figure out how. So, like I said, I would not want ot be in the title insurance industry now

Paul Kiel May 26th, 2012 at 3:25 pm
In response to bludog @ 57

When you do the loan lookup on Fannie Mae’s site does it say that they back your loan? http://www.fanniemae.com/loanlookup/

As I said above, all you can do is protect yourself. I DO NOT GIVE LEGAL ADVICE, but from what I know, I think the onus would be on the buyer’s title company to check it all out. If a buyer can’t get title insurance, then you know you have a real problem on your hands. Sad to say, but what you just laid out doesn’t sound at all extraordinary.

Paul Kiel May 26th, 2012 at 3:30 pm
In response to CTuttle @ 62

Well, homeowners out there looking for help need to be careful. There are a lot of hucksters.

bludog May 26th, 2012 at 3:31 pm
In response to Cynthia Kouril @ 63

Thanks for the reply. The original lender went out of business, as near as I can tell, about 8-9 years ago. They are long gone. Consulting a lawyer in my jurisdiction is not feasible. There is only one lawyer in the county and I know him well and he knows nothing about the relevant law. I know more about the law that applies than he does. The local bar association is a joke, to say the least.

Kelly Canfield May 26th, 2012 at 3:32 pm
In response to Cynthia Kouril @ 64

Agree. And why I brought up the appraisers and USPAP? Same thing.

See, I think that’s a sleeper issue for appraiser E&O insurers. Every loan that Fannie and Freddie bought had to have an attestation that the appraiser complied with USPAP.

Thing is to “make” the value? There are a couple ways to do that and slide under E&O coverage. The E&O insurer has to prove the appraiser did “something else” besides make an error or omission in order to get out of paying.

Which brings me to LSI/Lender Processing Services. What a scam. They required appraisers had such E&O insurance to get LSI off the hook.

PAUL – thoughts about the systemic crap of syndicates like LPS?

Cynthia Kouril May 26th, 2012 at 3:32 pm
In response to Paul Kiel @ 66

That’s the other thing, the mortgage industry continues to prey upon homeowners with all sorts of refi scams

tuezday May 26th, 2012 at 3:33 pm

Speaking of title insurance. Are buyers being turned down for title insurance? Or is title insurance being issued and what the big print giveth, the fine print taketh away?

This is all such a circuitous train wreck, I can’t believe it hasn’t fully derailed yet.

Cynthia Kouril May 26th, 2012 at 3:33 pm
In response to bludog @ 67

Usually, land law is statewide, consult a lawyer in a more populated county

Dearie May 26th, 2012 at 3:36 pm

Are Fannie Mae and Freddie Mac equally corrupt? Or is one easier to work with and more transparent?

Paul Kiel May 26th, 2012 at 3:39 pm
In response to Kelly Canfield @ 68

It’s really hard to disentangle LPS from the rest of the industry — it’s so intertwined. A large chunk of the servicing industry runs on LPS systems. It’s just part of the whole mindset: keeping costs low and outsourcing when possible. Despite all the bad press and lawsuits and a criminal investigation (that has been going on for years – what’s up with that?) LPS figures to emerge intact from the crisis. Sure, they have regulators on their back now, but they’re still chugging along. It’s been pretty impressive the extent to which the industry has been successfully resistant to change.

econobuzz May 26th, 2012 at 3:42 pm

Thank god, we have a Democratic President and Senate doing all they can do bring this all to an end.

CTuttle May 26th, 2012 at 3:44 pm
In response to Paul Kiel @ 66

…There are a lot of hucksters. That there are…! 8-(

On a side note, in yesterday’s Roundup, fatster provided a great tool…

Underwater homes by county and ZIP code…

I was stunned to see that on my Isle, most of the ‘underwater’ homes were along our ‘Golden Coast’, comprised mostly, of high-end($1 Million+) second(even third or more)’vacation’ homes…! Nestled among all our 4 and 5 star resorts…! One would presume they can afford the ‘haircut’, eh…?

Paul Kiel May 26th, 2012 at 3:44 pm
In response to Dearie @ 72

Good question. Given that they’re basically competitors, you’d expect there to be some real difference, but I haven’t really observed any. Part of that might be due to the fact that they’re both operating under the same regulator (the FHFA). A good example is the industry’s use of foreclosure mills. There have been a few cases where Fannie and Freddie have finally stopped sending their loans to these practices (google Steven J Baum and Halloween). When that happens, it basically means the firm goes out of business because F&F loans are such a large portion of the practice. Fannie and Freddie have generally acted together in those cases.

chicagogal May 26th, 2012 at 3:45 pm

Sorry I’m late! There has been such good discussion, and what great questions from everyone.

I didn’t know that you could go back to the title company for records. I assumed they would have the same records that I do, and mine don’t include any blank endorsements – though one has mysteriously been inserted into my file since the judge said it existed when he gave my house to the bank in January.

What about the issue of bifurcation? That is, when the note and deed are separated. Here in Illinois, my attorney told me recently that the court is going with the notion that the one follows the other regardless if they are still actually attached. The courts here are also taking homes while denying due process rights by refusing to hear and rule on counter-claims. And just to make things even more fun, they have started taking homes that have been in foreclosure for more than 1-1/2 – 2 years because that is apparently long enough for a deadbeat to get free housing, nevermind that the banks can’t prove their legal standing by producing the proper documentation!

HotFlash May 26th, 2012 at 3:46 pm
In response to Paul Kiel @ 49

t’s been horribly common for people to actually be thrown into default by no fault of their own. Probably the most common scenario is that the servicer makes some error with the escrow payments: for instance, the homeowner is dutifully paying their property taxes, but the servicer will just suddenly decide that the homeowner should be paying into an escrow account for the servicer to pay the taxes, but not communicate that decision to the homeowner. So all of a sudden the homeowner’s normal payment is short, triggering late fees, etc. And the homeowner may not find out that they’re considered in default for several months. Then it’s the whole slippery slope.

Slippery slope nothing, this is outright piracy!

DWBartoo May 26th, 2012 at 3:48 pm
In response to Paul Kiel @ 73

Good evening, Paul.

A most excellent Book Salon!

How were the LPS systems able to be so successfully “resistant to change”?

Did they have a wee bit of “help” from the political class, possibly or perhaps?

Did they face NO legal or legislative constraints, at all, upon their behaviors?

Overall, how long do you imagine it might be until what was once a stable system of property records and transference, publicly controlled and maintained, may be wrested from private “interests”?

DW

Paul Kiel May 26th, 2012 at 3:53 pm
In response to chicagogal @ 77

Mortgage and note law varies by state. I would quickly get out of my depth if I sounded off too much about this, but you should just know that it’s not the same everywhere.

And re: the courts, having done some reporting on Florida, it’s apparent that there are many judges who are just not bothered by servicer abuses or flaws in the chain of title. To many, the simple question at issue is whether the homeowner is in default. (The circumstances of the default don’t much matter, either.) If the answer is yes, then that’s often enough.

BevW May 26th, 2012 at 3:54 pm

As we come to the end of this great Book Salon discussion,

Paul, Thank you for stopping by the Lake and spending the afternoon with us discussing your new book and the foreclosure crisis.

Cynthia, Thank you very much for Hosting this great Book Salon.

Everyone, if you would like more information:

Paul’s website and book (ProPublica.org)

Cynthia’s website (Blog Posts)

Thanks all, Have a great Holiday Weekend.

Tomorrow: David Swanson – The Military Industrial Complex at 50: Hosted by Eric Stoner (WagingNonViolence.org)

If you would like to contact the FDL Book Salon: FiredoglakeBookSalon@gmail.com

Cynthia Kouril May 26th, 2012 at 3:55 pm
In response to chicagogal @ 77

So much of whether homeowners have any hope at all has to do with the intellectual honesty of the judge they are in front of. If the judge is willing to actually look at the facts, cases can proceed on facts.

Lazy judges on the other hand……

bgrothus May 26th, 2012 at 3:56 pm

I have a friend who sold a home last year, maybe in the fall, I don’t know exactly. Recently she found that her credit has been dinged because the home she sold is listed as being in foreclosure for 3 months, even though she sold it long ago. I am sure there was title insurance at the sale. . .I wonder what the new owner would say about this?

When I mentioned this to my state AG, re: the “settlement” he said she would probably need to hire a lawyer to get it fixed.

I just received a letter from the company I pay for my mortgage saying they are going into Chapter 11, but “don’t worry. Your payment will continue as before.”

I am convinced my mortgage, when it is paid off, will not be paid as there will be some other company claiming to own it. . .

Cynthia Kouril May 26th, 2012 at 3:57 pm

Paul, thank you so much for being with us today.

It was a great discussion.

And thanks to everybody on the thread for the great questions.

And as always, thank you Bev for a great job, you make it seem so easy!

Cynthia Kouril May 26th, 2012 at 3:58 pm
In response to bgrothus @ 83

Your mortgage servicer is going into Chapter 11? WTF, they practically print $.

I feel your stress.

Elliott May 26th, 2012 at 3:58 pm

What a great discussion, thank you Paul for writing a great book on the sorry mess.

Thank you Cindy for hosting, you were right here from the beginning.

And as ever, thanks Bev – for all you do to get these salons happening, because they don’t come together without some serious organization.

HotFlash May 26th, 2012 at 3:59 pm

Ooooh, too late! (Heh, originally typed ‘too latte’, and that too).

My conclusion, this is a judicial-system supported case of wealth transfer, and I do not understand why even the expert (such as our esteemed guest_ say, as does my father,(90 next July), “Well, what can you do?”

Sorry, that is just not good enough!

DWBartoo May 26th, 2012 at 3:59 pm
In response to Cynthia Kouril @ 82

One wonders if the judges are simply lazy or essentially prejudiced in favor of money and power, unexamined and unconstrained.

“Deference” to the dollar and and belief in the fundamental rectitude of the monied elite … the banks and banksters.

(I know, I conflated bankers and gangsters …Cynthia)

;~DW

Paul Kiel May 26th, 2012 at 4:00 pm
In response to DWBartoo @ 79

Probably the most general answer to your first questions is that LPS and the rest of the industry have resisted fundamental change because it was never on the table. What regulators and the state and federal entities involved in the mortgage settlement have concentrated on is creating a new code of rules. They were never going to upend the servicing industry. Probably for fundamental change, Congress would have to get involved, and there’s just little interest in that. The last big chance for that was in 2009.

As for how long it will take for us to have a stable system of property records, uh…. MERS appears like it’s here to stay.

DWBartoo May 26th, 2012 at 4:00 pm

Thank you Paul, Cynthia, and Bev.

A most-excellent Book Salon.

DW

Paul Kiel May 26th, 2012 at 4:01 pm
In response to bgrothus @ 83

And how have you enjoyed dealing with GMAC?

DWBartoo May 26th, 2012 at 4:03 pm
In response to Paul Kiel @ 89

In other words, it will be a long time coming … and the rule of law and human beings will suffer that a few may enrich themselves regardless of the true cost to society.

Thank you for responding Paul, and I hope that you might visit again, whenever the spirit so moves you.

A pleasure meeting you.

DW

Paul Kiel May 26th, 2012 at 4:03 pm
In response to bgrothus @ 83

More seriously, in addition to seeking an attorney, your friend should be sure to contact the servicer directly. Might also try complaining with the CFPB as that sometimes gets a more prompt response.

Paul Kiel May 26th, 2012 at 4:04 pm
In response to Cynthia Kouril @ 84

Thanks for having me, everybody! And thanks to Cynthia for moderating. It’s nice to have a knowledgeable lawyer around when you’re discussing this mess.

HotFlash May 26th, 2012 at 4:19 pm
In response to Paul Kiel @ 89

Oh dear, it is that table. Presumably the same one that impeachment and single-payer healthcare were off of. As a woodworker, I feel responsible. What can I do to make a smaller, or more selective, table?

CTuttle May 26th, 2012 at 4:20 pm

Mahalo Nui Loa, Paul, Cynthia, and, Bev for another awesome Salon…! *g*

econobuzz May 26th, 2012 at 4:24 pm
In response to HotFlash @ 95

Make a flip top table — so stuff can be moved off it easier.

HotFlash May 26th, 2012 at 4:26 pm
In response to econobuzz @ 97

I think they already did that …

econobuzz May 26th, 2012 at 4:29 pm
In response to HotFlash @ 98

Show our D heroes a table and they get under it.

HotFlash May 26th, 2012 at 7:06 pm

Sorry, so late!! from the promo: “Predatory lending and denied loan-modification applications eventually sent her and her three grandchildren packing, leaving behind their house in Florida and winding up in a tent outside of Ramos’s faraway hometown.”

What does this even mean? I don’t get it!! She lost her house? Paraphrasing Cptn Kirk, what does God a bank need with a starship house?

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